Better realisations and decent volume growth in 2009-10 helped the company report an impressive performance.
Sesa Goa reported a 121 per cent year-on-year (y-o-y) jump in consolidated net profit at Rs 1,215.11 crore for the consolidated fourth quarter ended March 2010. For 2009-10, net profit surged nearly 32 per cent (y-o-y) to Rs 2,639.04 crore.
Operating profit margin during the recently-concluded quarter was 62.1 per cent, as compared to 54.8 per cent during the previous quarter (up 20.6 per cent), on account of higher iron ore realisations and lower other expenditure. The company attributes this to strong Chinese demand for the mineral.
During the March quarter, the company produced 7.8 million tonnes (mt) iron ore, taking the 2009-10 production to 21.4 mt. Dempo’s operations contributed 1.9 mt and 3.6 mt in the March quarter and 2009-10, respectively.
Iron ore dispatches during the March quarter were 7.4 mt, up 47 per cent from the year-ago period. For 2009-10, dispatches rose 36 per cent to 20.5 mt compared to the previous year.
Sesa has iron ore reserves of 353 mt and is undertaking a Rs 556-crore expansion project. The pig iron capacity will be expanded by over 70 per cent to 6,50,000 tonnes, while the metallurgical coke capacity is planned be raised 120 per cent to 5,50,000 tonnes.
“Going ahead, we expect the company’s volumes to grow at a compounded annual growth rate (CAGR) of 18 per cent to 28.4 mt in FY12 over FY10-12E. This, coupled with strong iron ore realisations, will lead to earnings CAGR of 52.7 per cent over FY10-12E,” states an India Infoline report.
The stock ended 1.1 per cent higher at Rs 461.40 on the National Stock Exchange (NSE) yesterday and trades at 5.6x FY2011E and 4.4xFY2012E EV/Ebitda according to analyst’s estimates.
